Lecture 05 Managerial Decisions in Warehouse

Transcription

1 .. Lecture 05 Managerial Decisions in Warehouse Oran Kittithreerapronchai 1 1 Department of Industrial Engineering, Chulalongkorn University Bangkok THAILAND last updated: December 29, 2014 Warehouse v2.0: Managerial Decisions 1/ 18

2 Outline. 1 Warehouse Ownership. 2 Number & Location of Warehouse. 3 Space of Warehouse source: General references [BH09, Mul94, Fra02] Warehouse v2.0: Managerial Decisions 2/ 18

3 Basic warehousing decisions Ownership: inhouse, outsource (3PL: equipments, mgt, location) Site & Number: #, centralize, de-centralize Space: storage inventory turnover, aisle, admin, SKU & Equipment: Warehouse v2.0: Managerial Decisions 3/ 18

4 Private VS Public warehousing Private warehousing: a company owned warehouse can be on-site or off-site Public warehousing: an outsourcing warehouse Leased warehousing: long-term pubic warehousing based on contract for space and/or service (e.g., T-PARK, WHA ) source: Ballou, B.H Business Logistics/ Supply Chain Management [Bal04] Warehouse v2.0: Managerial Decisions 4/ 18

5 Considerations of private warehousing Business: business (XIVA, Boon-tha-vorn) & product (HazChem) inventory cycle Responsiveness: service level (high/low? UPS) to whom Availability & Capital: investment, available location Management: W/H Mgt professional, Control & Visibility: flexible, expense, special service Other: real estate, possible sites (mfg, sale) Warehouse v2.0: Managerial Decisions 5/ 18

6 Benefits of public warehousing Expansion: no fixed investment many sites Professional: equipments, data collection Predictable rate: no risk & on surprise expense Special public warehouse: ambient, chilled, bonded, household, bulk (unit load) Public warehousing rates Products: value, fragility, weight, density, qty & volume Time: storage charge Transaction: handling, documents, report, #counts Others: reserved, fluctuation, data connection Warehouse v2.0: Managerial Decisions 6/ 18

7 Centralized & De-Centralized Centralized warehouse Idea: pooling all inventories/resources in one location What: big & single warehouse Example: Boon Tha Worn, Pine Pacific, SCG dealer, HomePro Decentralized warehouse Idea: improving response & customer service What: small & many warehouses Examples: Barn & Nobles, Wal-Marts, Home Depot, 7Eleven, Zara Warehouse v2.0: Managerial Decisions 7/ 18

8 Advantages of centralizing inventory Simplify ordering: one-location all items Eliminate additional sites/operations: explore cheap labor & economy of scale Reduce capital & inventory: specialized equipments, reducing safety stock Consolidate freight: reduce transport cost, create freight integrity Multiple means of transportation: justify intermodal (rail+truck, water +truck) Warehouse v2.0: Managerial Decisions 8/ 18

9 Limitation of centralizing inventory Customer pick-up: e.g., Best Buy policy Long transportation time: poor response & service lv Slow decision: # of traffic & transactions Risk from consolidation: no back up plan Selecting locations: many customer single location Warehouse v2.0: Managerial Decisions 9/ 18

10 Questions for decentralized warehouse How many warehouses should there be? Where should they be located? How does customers get their orders? assigning item-warehouse; shipping item-to-customer Good news Cluster of customers or facility: city, population, airport, utility, workforce Site of competitors: e.g., Boots VS Watson, 7Eleven VS other Wait-And-See approach: one warehouse/one building at a time Issues: expanding urban area, restricted zone Warehouse v2.0: Managerial Decisions 10/ 18

11 Brown Field Space Requirement What: data (trend) & design Idea: weight/throughput volume storage space req.space Space requirements: building & equipments Storage: equipments, stackable, inventory turnover (> 50%) Aisle: equipments, flow (20 40%) Docks: staging area, buffer area Admin: expansion, investment (5%) Warehouse v2.0: Managerial Decisions 11/ 18

12 Example: ChemTech Part I ChemTech, a small chemical company, plans to build a warehouse. The projected monthly demands are as follow: Month Demand Month Demand Month Demand (ton) (ton) (ton) Jan 66.5 May Sep 99.9 Feb Jun Oct 15.3 Mar Jul Nov Apr Aug Dec If inventory turnover ratio of 36 turn per year & average density of chemical of 500 kg/m 3 are expected. Historically, products can be stacked 3.0 m high, required 50% of area for aisle, & utilized 80% space. What are space requirement of each month? What is your recommend space of warehouse (justify)? source: Ballou, B.H Business Logistics/ Supply Chain Management [Bal04] Warehouse v2.0: Managerial Decisions 12/ 18

13 Part 1: Solution Area Demand Avg Inv Avg Vol Storage Required (1000kg) (1000kg) (m 3 ) (m 2 ) (m 2 ) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Warehouse v2.0: Managerial Decisions 13/ 18

14 Example: ChemTech Part II A warehouse with equipment can be constructed for $600 /m 2 amortized over 20 years, & operated at 0.01 /kg of throughput. The annual maintaining fixed cost are $30 /m 2. In addition to the warehouse, the company may rent additional space with the same configuration at an adjacent location. The rental charge & in-out handling fee are $0.01 /kg-month of space & $0.015 /kg of throughput, respectively. What warehouse size should be constructed? source: Ballou, B.H Business Logistics/ Supply Chain Management [Bal04] Private Rent name value name value capital rent Space (m 2 1 ) Construction s p Storage 10 s r 1 (s p + s r ) Maintainable s p oper fee Throughput (ton) Oper. 10 d p In-Out Fee. 15 d r (d p + d r ) Warehouse v2.0: Managerial Decisions 14/ 18

15 Part 2: If build 1000 m 2 Private Rent Demand Req.A capital oper. rent fee Total Jan % Feb % Mar % Apr % May % Jun % Jul % Aug % Sep % Oct % Nov % Dec % Total note: demand 1800 ton avg. inventory 600 ton volume 1200 m 3 space 1000 m 2 Warehouse v2.0: Managerial Decisions 15/ 18

16 Part 2: Trial & Error Private Rent Area capital oper. rent fee Total Warehouse v2.0: Managerial Decisions 16/ 18

17 Problems 1. Explain why warehouses have a tendency to cluster around each others? 2. What are an leased warehouse? Why this practice become popular after 2010 Thailand Flood. 3. Explain the following features that support an implementation of a private warehouse? Nature of business: Storing product: Financial capital: Warehouse v2.0: Managerial Decisions 17/ 18

18 Reference [Bal04] [BH09] [Fra02] Ronald H Ballou. Business Logistics/Supply Chain Management. Pearson Education International, J. J. Bartholdi and S. T. Hackman. Warehouse & distribution science. Suply chain and logistics institute, Georgia institute of technology, E. Frazelle. World-class warehousing and material handling. McGraw-Hill Professional, [Mul94] D.E Mulcahy. Warehouse distribution and operations handbook. McGraw-Hill New York, Warehouse v2.0: Managerial Decisions 18/ 18